A look at return on equity
The Kroger Co. (KR) has posted above-average return on equity during the last three years despite high levels of investment. The company’s ROE (return on equity) stood at 31% in fiscal 2015 as compared to Whole Foods Market’s (WFM) ROE of 15%, Walmart’s (WMT) ROE of 20%, and Costco Wholesale’s (COST) ROE of 17.8%. ROE reflects the amount of net income as a percentage of equity capital.
Kroger currently trades at a one-year forward PE ratio of 18.2x. It is cheaper than Sprouts Farmers Market (SFM) at 23.5x and Costco at 27.7x, but it is pricier than SuperValu at 8.7x and Walmart at 13.4x. This comparison is based on data from October 26, 2015.
Share repurchase and dividends
Kroger (KR) has a long-term financial strategy to use its cash flow from operations in repurchasing shares and funding its dividends.
The company’s strong financial position allowed it to return $924 million to its shareholders through dividends and $3.1 billion through share repurchases between fiscal 2013 and fiscal 2015.
Stock price movement since 2014
Kroger’s stock performance has been outstanding in relation to its peer group. The stock has risen by more than 90% since 2014 (as of October 26, 2015) compared to dull performances by its peers Whole Foods Market (WFM) with a 40% fall, Sprouts Farmers Market (SFM) declining by 34%, and Walmart (WMT) declining by more than 20% during the same period.
It outperformed the S&P 500 Index (SPY), which registered a growth of 16%, and the S&P 500 Retail Food and Staples Index, which grew by 22% during the period.